Life changing money - how much would it take?

[Searc]

$500k would allow us to pay off our house, replace both of our 16 year old beaters, and fully fund our kids' future college expenses. We'd both still work at that point but the freedom of not having a house payment or college savings to worry about would be amazing.

$3 million would afford us all the above, plus neither of us would ever have to work again.

But, if we never get a single dollar of windfall, we'll still be fine; we're doing FAR better than others in our age group. We're late 20s/early 30s milennials with zero debt other than the house, a healthy household income compared to the average in our area, and no major health concerns (knock on wood).

Because of your age, $3 million isn't enough to support you the rest of your lives. You'd both still have to work.

 

[Hisgirl]

A thought about your brothers. If it were me, and I wanted to close out the estate. I would buy plane tickets and take the forms in person and get them signed. If they are both in poverty, they will most likely still be in poverty and possibly in debt shortly after getting the inheritance. 'Squandering Sudden Money' was the topic of my grad paper. Even folks who win multi mega lotteries are mostly spent and in debt within 5 years. Money should come with a plan. I hope they can get some guidance on how to handle it.

The best thing would be if they could sit with a fee only financial planner or life coach and put together a job training plan or find a way to let that money work for them. Even $200K is just not that much money and invested would only be bringing about $8K per year in interest or $667 per month. Hardly a big difference. Unless they have lingering school loans which should be paid off since their social security check can be garnished if they have outstanding school loans.

 

[nkereina]

$150,000 would be great, but not life changing for me. What I would consider life changing would be a sum that would allow DH and I to quit our jobs, never work again, buy a house in Hawaii, and float on a raft in the ocean every day So, lottery money.

Any amount less than that we'd certainly be grateful for, but we would pay off our mortgage, invest some, and continue to work living the same lifestyle we do now. And maybe take a trip to WDW staying at the Polynesian

 

[firefly_ris]

Hmm. Good question... $80k would get rid of the mortgage that we still have 23 years left on otherwise... $120k we could get 2 new vehicles. Not having the mortgage payment would remove a lot of the stress with my work, and I could reduce my hours and be more available for the kids and family. I would definitely have an overall level of stress and also take some stress off my husband, so I guess those aspects alone would be 'life changing' in a way. $500k would be more significant... college wouldn't be a worry for my kids. But we'd still work, put away for retirement, etc. I don't know what the "never work again" number would be, I guess it's hard to visualize having that much!

 

[fla4fun]

Life changing? Over $10 million. Enough to invest and live comfortably on for the rest of my life. Life changing, to me, means that you don't live your life the way you did before. That doesn't mean that it wouldn't be nice to get less. If I got $50,000.00 I could remodel the house and landscape the yard, which would be nice, but not necessarily life changing.

 

[cabanafrau]

I think a million would definitely be enough to significantly change our lives. First thing I'd like the opportunity to do is put a good chunk of that to work for us.


OP, I would urge you to take great pains about how you proceed with the purchase of assets out of an estate you have accepted the fiduciary responsibility of administering. Things like that are a frequent source of protracted, and incredibly expensive, legal battles. It is well worth it to get top notch legal advice.

 

[china mom]

Are your brothers close enough that you could go to where they are and have them sign before you - you can be the one who drops it in the mail, then.

No. I thought about hiring an Uber driver to get the letter and mail it

 

[Minnesota!]

I can’t tell you why they’re not eager to get it but I can almost guarantee that it would be life changing for them only briefly. People who are perpetually broke by their own making and waiting for their ship to come in rarely learn to magically manage money.

Yep. An old acquaintance, perpetually broke due to not being able to work, inherited a good sized chunk of money when his mom died. Bought himself a plot of land up north. Then lost all the rest to...something...and now lives in a tent on said land. In northern MN. Where, ya know, it gets a wee chilly.

No. I thought about hiring an Uber driver to get the letter and mail it

Genius!

 

[china mom]

OP, I would urge you to take great pains about how you proceed with the purchase of assets out of an estate you have accepted the fiduciary responsibility of administering. Things like that are a frequent source of protracted, and incredibly expensive, legal battles. It is well worth it to get top notch legal advice.

I agree, which is why I have hired two lawyers, one for each estate. Neither brother (allegedly) has any problems with me or my purchase of the houses but I know that anything can happen. They will actually see a little more money because we will be saving on real estate commissions so they should be happy with that, at least. If they buck at all before the sale goes through, I am ready to sell both houses to third parties and cash in my share.

The problem is, the brother who died, did so intestate and the paperwork that they are holding up is so that I can open his estate and be PR (neither one wants to do it). I can't disperse mom's estate until I open the brother's and have somewhere to deposit that money.

Oh, and to make things even more complicated, I have to re-open dad's estate to probate a piece of land that Mom had paid property taxes on for decades. I am tempted to just abandon that one but am not sure I can legally do so.

 

[cabanafrau]

I agree, which is why I have hired two lawyers, one for each estate. Neither brother (allegedly) has any problems with me or my purchase of the houses but I know that anything can happen. They will actually see a little more money because we will be saving on real estate commissions so they should be happy with that, at least. If they buck at all before the sale goes through, I am ready to sell both houses to third parties and cash in my share.

The problem is, the brother who died, did so intestate and the paperwork that they are holding up is so that I can open his estate and be PR (neither one wants to do it). I can't disperse mom's estate until I open the brother's and have somewhere to deposit that money.

Oh, and to make things even more complicated, I have to re-open dad's estate to probate a piece of land that Mom had paid property taxes on for decades. I am tempted to just abandon that one but am not sure I can legally do so.

Yep, I remember you posting about this situation before. My prediction, the squawking and trouble generally comes afterwards. It's in your best interest to get very good professional valuations of the current market value of the properties you intend to buy and pay the going rate. You should still be entitled to your one third of the sale proceeds afterwards.

 

[kimblebee]

We could be ok with $100,000 but life changing would probably be $500,000-$1,000,000. With that we could build a house with all the modifications we want and need. We could buy a car, we could pay for my daughters school and set her up with a big for after school. I’d also make a sizeable donation to the inner city daycare where I’m the chairperson.

 

[Floridaman999]

.

 

[china mom]

Brother #1 would likely blow the money all at once on gender reassignment surgery but -- isn't that the epitome of "life changing"?

Brother #2 would be able to buy a condo if he and his wife were willing to get out of the high prices area they are in. She is a licensed psychologist and he works too. It is solely disorganization and poor decisions that have them in the situation they are in. Sadly, this won't change with money.

Brother #3 was bequeathed my mother's van but hasn't had a license in decades so I bought it from him for $12K. He spent that on heroin, hence, the need to probate his estate. I guess that was "life changing" too.

Me: as I said before, it would not change my day to day operations. If I do end up selling the houses and take the cash, I will sock it away for my second retirement.

 

[MikeNamez]

10 million I'm showing up to work on Monday but not a care in the world.
25 million I'm retired and playing golf everyday.

 

[coast2coastmickey]

Because of your age, $3 million isn't enough to support you the rest of your lives. You'd both still have to work.

I disagree. Here's my assumptions:

$2,500,000 nest egg (after paying off home and funding college)

$75,000 annual spending (3% withdrawal rate)
less $12,000 healthcare spending (plus or minus, but it's a ballpark)
less $18,750 taxes (using 25% effective tax rate; for what it's worth, the current rates are half that in reality)
leaves $44,250 to "survive" even using these VERY conservative assumptions.

That $44k to live on is positively luxurious when you're not commuting to work and when you're not making a house payment. If you squander $4k a month in addition to housing, transportation, and healthcare, you're living better than probably 95% of Americans and 99.9% of the world.

Per firecalc.com, a portfolio of $2,500,000 with $75,000 annual spending, invested 75% equities and 25% fixed income, over a period of 70 years (assuming I live to 100) has a 100% success rate. That's accounting for the Great Depression, multiple world wars, multiple stock market bubbles, and various other scary things.

FIRECalc looked at the 78 possible 70 year periods in the available data, starting with a portfolio of $2,500,000 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 78 cycles. The lowest and highest portfolio balance at the end of your retirement was $2,500,000 to $104,285,880, with an average at the end of $41,862,843. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

For our purposes, failure means the portfolio was depleted before the end of the 70 years. FIRECalc found that 0 cycles failed, for a success rate of 100.0%.​

So using actual back tested data, in the WORST 70 year period ever in stock market history, I would die, at age 100 with $2,500,000 in the bank. In the BEST, I'd have $100 million in the bank.

Let's not forget that Medicare will probably still be a thing when I'm older and even if I only get 50% of expected Social Security, that's even more safety margin.

And this is assuming that I never make a single additional dollar from a job, ever.

So yeah, I'm still good with $3 million

 

[china mom]

Yep, I remember you posting about this situation before. My prediction, the squawking and trouble generally comes afterwards. It's in your best interest to get very good professional valuations of the current market value of the properties you intend to buy and pay the going rate. You should still be entitled to your one third of the sale proceeds afterwards.

Agreed. I almost had them apprised early on but now I am glad I have waited so I didn't have to pay for appraisals twice. It has taken so long.

I am using my 25% as my down payment and financing the rest.

The third brother's share will go to his estate, with the same heirs - two brothers and myself. If medicaid does not eat all of that up, there is a potential for that money to be split 3 ways.

 

[PollyannaMom]

The other thought that rolled into my head was why do many people only play the lottery when the jackpot is in the mega millions. I would think that $1M would be pretty life changing for a lot of people.

I've thought about that too. My family thinks I'm nuts, but I'd rather win the "small" prize. The big one is just too public, too much responsibility...too life-changing. I talk about what I'd do with it, but actually being in that position would be very stressful in a way.

For us it would be about $500,000 after taxes. It would also be an amount that no one else would really need know about.

I am so not into drama!

I'm going to say $800,000 (after taxes) would be enough for me to move (read, build my dream house) so I guess that's the life-changing level. Below that, I'd probably put it toward less dramatic things - pay off debts, DS's college tuition, trips, improvements to our current house, extra in the retirement savings...mostly things that would happen anyway, but faster and better.

 

[Christine]

My husband's father passed away about 3 weeks ago and we are starting on his estate. It looks as if each of the siblings will get about $300,000. I was just thinking about this last week and realized that while it sounds like a lot of money, it won't actually change anything for us. Whatever we "net" out of it is not enough for us to, say, buy a house closer to our jobs (just not enough in this area), nor allow either of us to retire a bit earlier (we are both within 7 years of retirement).

I think it would take at least $1M for us to do the only "life changing" thing we would do and this is retire a bit earlier. I would feel financially secure enough to do that.

 

[MikeNamez]

I've thought about that too. My family thinks I'm nuts, but I'd rather win the "small" prize. The big one is just too public, too much responsibility...too life-changing. I talk about what I'd do with it, but actually being in that position would be very stressful in a way.

I'm with you on that one.

 

[disykat]

A thought about your brothers. If it were me, and I wanted to close out the estate. I would buy plane tickets and take the forms in person and get them signed. .

If only it were so easy! I'm going through this too, so if her experience is anything like mine.... every signature you get or paperwork you get filed generates another layer of paperwork and signatures to wade through. I'm traveling between two states for our trust work and every time I think I've got everything it starts all over again. And I'm just trying to pay bills not inherit money!